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Patents for Victory: Disseminating Enemy Technical Information During World War II
Michael White
SUMMARY. In national emergencies governments have the power to suspend patent rights. During World War II, the U.S. government seized tens of thousands of foreign-owned patents and other forms of intellectual property. The agency responsible for this was the Office of the Alien Property Custodian (APC). The APC was charged with making the technical information disclosed in these patents available to American industries for use in the war effort. To accomplish this mission the agencyâs
Patent Information and Marketing Section established patent libraries nationwide; exhibited patent information at trade shows and conferences; published and sold catalogs, indexes and abstracts of seized patents; and distributed patent information to other agencies and libraries.
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2001 by The Haworth Press, Inc. All rights reserved.]KEYWORDS. Patents, patent applications, copyrights, trademarks, inventions, patent classification, Office of the Alien Property Custodian, APC, Department of Justice, patent office, World War I, World War II, Leo T. Crowley, James E. Markham, compulsory patent licensing, APC Patent Libraries, information dissemination programs, scientific and technical information
INTRODUCTION
Congress shall have the power to promote the progress of science and the useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries. (Constitution of the United States, Article 1, Section 8, Clause 8)
At the height of last yearâs anthrax scare, the U.S. government discovered that its stockpile of medicines used against diseases such as anthrax and smallpox contained only a few million doses. Nervous public health officials admitted that this supply was inadequate to treat even one metropolitan area exposed to biological attack. The obvious solution was to mobilize the pharmaceutical industry and increase drug production as quickly as possible, but companies such as Bayer, the maker of the antibiotic CIPRO, balked at allowing competitors to make generic versions of their patented drugs. Many countries permit the compulsory licensing of pharmaceutical patents in public health emergencies, but the practice is unheard of in the U.S., which has traditionally supported strong patent protection for drug manufacturers (Chartrand 2001). The government of Canada acted decisively by suspending Bayerâs patent rights and ordering one million doses from generic manufacturers. The U.S. response was uncertain and wavering. Health officials initially promised to respect Bayerâs patents but then suggested that the government might resort to price controls or compulsory licensing in order to obtain the needed drugs (Bradsher 2001). Representative Sherrod Brown of Ohio went so far as to introduce legislation to that effect in November (Brown, H.R. 3235). Under this pressure and facing a public relations disaster, Bayer and other drug companies agreed to meet the governmentâs price in exchange for keeping their patent rights intact.
This was not the first time that a national emergency has prompted the federal government to suspend or usurp the rights of inventors and patent owners. During World War II, the U.S. seized tens of thousands of patents and patent applications belonging to citizens of the Axis powers, Germany, Italy and Japan, their allies Romania, Hungary and Bulgaria, and Axis-occupied nations with the intent of making the technology disclosed in them available to U.S. industry. The agency authorized with this task was the Office of the Alien Property Custodian, commonly referred to as the APC. The APC had the power to seize or âvestâ real property, such as ships, real estate, business enterprises, factories, personal property and all forms of intellectual property. From March 1942 to October 1946 the APC vested approximately 46,000 patents, 4,800 patent applications, 800 inventions, 400 trademarks and 200,000 copyrights, making it the largest holder of intellectual property in the U.S. at that time (APC Annual Report 1945, 1949). One of the most infamous assets seized was the copyright to Adolf Hitlerâs Mein Kampf (APC Vesting Order 128, 1942). Of course, the activities of the APC during World War II, especially with respect to the seizure of private property, are diverse and complicated. This paper will focus only on the agencyâs patent information dissemination and licensing programs. However, in order to understand these programs and their impact on the war effort it is necessary to first summarize the pre-war history of the APC.
WORLD WAR I AND THE CREATION OF THE APC
Seizing the rights to Mein Kampf may not have been the greatest literary coup of the 20th century but it must have pleased many Americans in the first difficult months of 1942. However, it would not have been possible without the assistance of another German leader, Kaiser Wihelm II, a generation earlier. Congress formally established the Office of the Alien Property Custodian in the Trading With the Enemy Act enacted in 1917 shortly after the United States declared war on Imperial Germany and entered World War I as an ally of Great Britain, France and Italy. The mission of the APC was to seize enemy-owned property in the U.S. and dispose of it for the benefit of the war effort. Prior to the war, German financial and commercial interests in the U.S. were significant and widespread. The German chemical industry, nurtured by fifty years of government support and protectionist policies, enjoyed especially strong influence through its numerous U.S. subsidiaries, licensing agreements and patents. German artificial dyes brightened the clothes Americans wore and colored the food they ate. American doctors treated infant paralysis and other diseases with drugs created by the German companies such as Merck and Bayer. Other desirable German technology included optics, electrical equipment and scientific instruments, many of which were protected by U.S. patents. From 1900-1916, German inventors obtained more than 100,000 U.S. patents (Patent Office Annual Reports, 1900-1916). The coming of war in 1914 exposed the dependence of the U.S. economy on imported German technology and technical information.
Although the United States was neutral for the first three years of the war, the British maritime blockade of Germany effectively cut off American manufacturers and consumers from German technology and products. Germany, lacking the naval power to break the blockade, turned to unconventional means in order to maintain trade relations with the United States. On July 16, 1916, the German submarine Deutschland arrived in Baltimore with a million-dollar cargo of artificial dyes and pharmaceuticals. Financed by a group of German businessmen, the Deutschland was the first of seven large merchant submarines capable of carrying hundreds of tons of cargo. The subâs visit captivated the public, journalists and politicians. Captain Paul Koenig, the politically astute commander of the Deutschland, gave press interviews and entertained groups of U.S. senators and representatives while his crew loaded a cargo of American nickel, tin and crude rubber destined for German armament factories. The Deutschland made another trip to the U.S. in November 1916 carrying $10 million in drugs, dyes, securities and precious stones and returned to Germany with more raw materials and mail. Unfortunately for the burgeoning transatlantic undersea shipping business, the German governmentâs decision in January 1917 to resume unrestricted submarine warfare, an act that enraged Americans, torpedoed any hope of continued peaceful relations. The U.S. declared war on Germany on April 6, 1917.
Although the APC confiscated more than $556 million in German-owned business enterprises, ships, stocks and intellectual property, its performance was hobbled by time, inexperience and scandal. Germany agreed to an armistice in November 1918, less than a year after the APC was organized. The government had taken no steps before the war to identify German-owned property and the APC had confiscated the property and goods of many naturalized German-American citizens by the time the guns ceased firing at 11:11 a.m. on November 11, 1918. The APC also undertook questionable sales and transfers of enemy property in its haste to dispose of its assets before a peace settlement was concluded. From 1917 to 1925 the APC sold 6,373 patents and licensed another 5,867 out of approximately 10,000 patents and patent applications seized (APC 1925). In early 1919, while President Wilson was in Europe attending the Versailles Peace Conference, Alien Property Custodian A. Mitchell Palmer and his successor Francis P. Garvan approved the sale of thousands of patents, patent applications and trademarks to the Chemical Foundation, Inc., a consortium of American chemical companies. It was later alleged that the Chemical Foundation was a front for German interests seeking to reclaim their patent portfolio. In fact, during the 1920s some German companies, such as Bosch, did create shadow subsidiaries and holding companies in an attempt to reestablish their technological dominance and to stifle U.S. innovation. The subsequent scandal saw Garvan, who also served on the board of directors of the Chemical Foundation, charged with fraud. Lawsuits and property claims, both legitimate and fraudulent, harried the APC into the 1930s (Steen 2001).
THE APC IN WORLD WAR II
In 1934, the APC became an agency of the Department of Justice where it continued to resolve claims and lawsuits arising from its activities during World War I. In December 1941, shortly after the Japanese attack on Pearl Harbor and Germanyâs declaration of war against the U.S., President Roosevelt asked Leo T. Crowley, a fellow Democrat and head of the Federal Deposit Insurance Corporation, to take on the job of Custodian. Roosevelt had been planning for more than a year to move the APC out of the Justice Department and establish it as an independent agency under his direct authority. He understood that the APC was a politically sensitive position and did not want a repeat of the scandals that had tarnished the agency and the administration of President Wilson (Weiss 1996). As late as 1943, the U.S. was still prosecuting claims made against property seized in 1918-1919 (âU.S. Sues Lawyer over Alien Assetsâ The New York Times 1943).
Roosevelt was also familiar with the problems of mobilizing war production when critical technologies were under patent protection. During World War I, the United States Army and Navy had experienced difficulties filling orders for equipment and spare parts because manufacturers were reluctant to accept government contracts for fear of infringing another companyâs patent rights. As acting Secretary of the Navy, Roosevelt had urged the Senate N...
